Glossary of CRE Terms
Absorption: See Net Absorption.
Absorption/Occupied Stock: Absorption divided by occupied stock from beginning of one time
period to the end of the time period.
Anchor Tenant: The store(s) and other users (e.g., movie theatres) that generally occupy the
largest spaces in terms of square footage and serve as the primary draw of customers in a
shopping center. Typical anchors are supermarkets, drug stores and department stores.
Average Household Income: The average income per household for the time period of reported
data, as defined by the U.S. Bureau of the Census.
Commission: See Leasing Commissions.
Community Shopping Center: A retail property offering a wider range of apparel and general
merchandise than a neighborhood center. Discount department stores (e.g., Wal-Mart, Kmart and
Target). The gross leaseable area generally runs from 100,000 square feet to 350,000.
Competitive Inventory: The total square footage or total number of units or square footage of
completed properties that are competitively rented. Competitive properties are office buildings,
industrial properties, regional, community, and neighborhood shopping centers of 10,000 square
feet or greater, or rental apartment complexes of 40+ units (in California, REIS includes
apartment complexes of 10+ units). Owner-occupied, medical office buildings, cooperatives,
condominiums, furnished rental apartments, federally subsidized housing units, and buildings
under construction are excluded from the inventory.
Competitive Size: A more granular look at new construction inventory coming online it
represents the total number of units in a multifamily project that are slated to be market rate
rentals (e.g. a condo will be 0 unless a portion of the building is to be rented at market rate)
Completions: The amount of new space added to market inventory during the time period
indicated.
Construction/Absorption: In Market Trends, construction (i.e., Completions) during the year
divided by absorption during the time period indicated.
Contract Rent Discount (CRD): The average percentage discount offered by building
owners/managers from the market asking rent to final negotiated contract rent.
Effective Rent: The average market rent, less the present value over the lease term of free rent,
tenant improvements above standard, contract rent discount and/or other concessions, including
moving allowances and waived fees.
Effective Rent % Change: The percent increase or decrease in the effective rent rate between
the time period indicated.
Enclosed Shopping Center: A center which has a walkway or mall that is enclosed, heated and
cooled, insulated and lighted. The mall corridor has storefronts on one or both sides.
Estimated Completion (Month): The estimated month of completion for a new construction
project.
Estimated Completion (Year): The estimated year of completion for a new construction project.
Expenses: The average annual cost, per square foot or per unit, of operating buildings in the
REIS submarket survey sample, including property taxes, energy, janitorial service, insurance,
general building maintenance, management and leasing fees, and other expenses.
Free Rent: The average free rent concession expressed as the number of months over the lease
term. This is calculated using the following formula: (SIZE x OCCUPANCY x MARKET
RENT x FREE RENT) / (LEASE TERM x 12).
Gross Revenue/Unit: The average potential rental income, calculated by multiplying occupied
space by the asking rent divided by the total inventory.
Households: The number of occupied housing units, as defined by the U.S. Bureau of the
Census.
Industrial Employment: The total number of persons employed in construction, manufacturing,
transportation and public utilities.
Inventory (Buildings): Estimated total number of competitive properties based on the REIS
database. For size, age, and rent peers, represents the number of buildings sampled within the
peer range.
Inventory (Units/Sq. Ft.): Estimated total square footage or units in competitive properties based
on the REIS database. For size, age, and rent peers, represents the total square footage or units
sampled within the peer range.
Lease Term: The average term currently being quoted for new leases (in years).
Leasing Commission: An amount paid to a real estate broker in exchange for bringing a tenant
and landlord together to form a lease agreement. Usually paid in the form of a percentage of the
yearly rent.
Leasing Commissions (%): The average commission paid to leasing agents expressed as a
percentage of market rent.
Market Rent: The annual average asking rent per square foot (or per unit for apartments). For
office and apartment, rent is on a gross basis and includes expenses. For retail and industrial rent
it is on a triple-net basis.
Market Rent % Change: The percent increase or decrease in the market rent rate between REIS
survey periods.
Metropolitan Area: Geographical division of the United States encompassing a major city and
its surrounding communities/counties.
Neighborhood Shopping Center: A shopping complex constructed around a supermarket and/or
drug store as the only anchor tenant(s). It provides for the sale of convenience goods and
personal services for the day-to-day living needs of the immediate neighborhood. The gross
leaseable area typically ranges from 30,000 square feet to 150,000 square feet.
Net Absorption: The net change in occupied space between the time periods indicated.
Preleased spaces in buildings under construction are not included in order to avoid double
counting of tenants in the process of moving within the market.
Occupied Stock: The total square feet of occupied space or total number of
occupied units in completed buildings throughout the market.
Operating Expenses: The average annual cost per square foot of operating commercial
buildings in the subject submarket. Includes property taxes, energy, janitorial service, insurance,
general building maintenance, management and leasing fees, and other expenses. For apartment
properties, the operating expense is expressed as a percentage of gross potential revenue.
Population: Total number of inhabitants in the defined geographic area as defined by the U.S.
Bureau of the Census.
Power Center: A collection of three or more anchor stores generally located within a center
larger than 250,000 square feet, and where the total anchor space accounts for 75% or more of the
center’s total area.
Regional Center: A shopping center whose main attractions are its anchors: traditional
department stores (e.g., Macy’s Filenes), mass merchant department stores (e.g., Sears, J.C.
Penny), or fashion specialty stores (e.g., Neiman Marcus, Nordstrom). Typically enclosed and
connected by a common walkway. The total gross leaseable area generally is at least 400,000
square feet.
Size (Sq. Ft./Units): The size, in square feet or total number of units, of a property.
Status: The current status of a new project (e.g., under construction, proposed).
Strip Center: A shopping center that typically consists of a straight line of stores with a common
parking area. Stores are entered individually from the parking lot through outside entrances. The
anchor tenant may be a supermarket, discount store, major department store, or a specialty
retailer. The center usually ranges in size from 30,000 to 250,000 square feet.
Submarket: Geographical division of a metropolitan area comprising a neighborhood or business
concentration/corridor.
Subsector: A subdivision that applies to “Retail” and “Industrial” sectors.
“Retail” sectors can be further broken down by “Anchor” and “Non-Anchor,” and “Industrial”
sectors can be broken down by “Warehouse” and “Flex.”
Tenant Improvements: The average value granted to a new tenant by an owner for work done
on previously occupied space throughout the REIS submarket survey sample (expressed as
dollars per square foot per lease term).
Total Employment: Total non-agricultural employment.
Triple Net Lease: A lease agreement in which the tenant pays contract rent to the landlord, and,
in addition, separately pays the operating expenses of the property. Specifically, the triple
expenses for which the tenant pays are property taxes, insurance and maintenance.
Vacancy %: The percent of unoccupied space in completed buildings throughout the market,
calculated by dividing the vacant stock by the total inventory.
Vacant Stock: The amount of available space in the market.
Note: For additional terms definitions and terminology, it is strongly encouraged that each
participant refer to the Barron’s Dictionary of Real Estate Terms, which was provided in the
Fundamentals of CRE training class and/or may be obtained through BB&T University.